ROBERT REICH: Here's What Happens To Countries That Stop Valuing The Public Good

Robert
Reich is one of the nation’s leading experts on work
and the economy, is Chancellor’s Professor of Public Policy
at the Goldman School of Public Policy at the University of
California at Berkeley. He has served in three national
administrations, most recently as secretary of labor under
President Bill Clinton.

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Meryl Streep’s eery reincarnation of Margaret Thatcher in “The
Iron Lady” brings to mind Thatcher’s most famous quip, “there is
no such thing as ‘society.’” None of the dwindling herd of
Republican candidates has quoted her yet but they might as well
considering their unremitting bashing of everything public.

After all, what makes us a society is a set of mutual benefits
and duties embodied most clearly in public institutions — public
schools, public libraries, public transportation, public
hospitals, public parks, public museums, public recreation,
public universities, and so on.

Public institutions are supported by all of us as taxpayers, and
they are available to all. If the tax system is progressive,
those of us who better off (and who, presumably, have benefitted
from many of these same public institutions) help pay for
everyone else.

“Privatiize” means pay-for-it-yourself. In an economy whose
wealth and income are more concentrated than any time in 90
years, the practical consequences is availability to fewer and
fewer.

The story of our time is a decline of the public good.

Much of what’s called “public” is increasingly a private good
paid for by users — ever-higher tolls on public highways and
public bridges, higher tuitions at so-called public universities,
higher admission fees at public parks and public museums.

Much of the rest of what’s considered “public” has become so
shoddy that those who can afford to find private alternatives. As
public schools deteriorate, the upper-middle class and wealthy
send their kids to private ones. As public pools and playgrounds
decay, they buy memberships in private tennis and swimming clubs.
As public hospitals decline, they pay premium rates for private
care.

Gated communities and office parks now come with their own
manicured lawns and walkways, security guards, and backup power
systems.

Why the decline of public institutions? The financial squeeze on
government at all levels since 2008 explains only part of it. The
slide really started more than three decades ago with so-called
“tax revolts” by a middle class whose earnings had stopped
advancing even though the economy continued to grow. Most still
wanted good public services and institutions but could no longer
afford the tab.

Since then almost all the gains from growth have gone to the top.
But as the upper middle class and the rich began shifting to
private institutions, they withdrew political support for the
public ones. In consequence, their marginal tax rates dropped —
setting off a vicious cycle of diminishing revenues and
deteriorating quality, spurring more flight from public
institutions. Tax revenues from corporations also dropped as big
companies went global — keeping their profits overseas and their
tax bills to a minimum.

Beyond all this is the reality that America no longer values
public goods as we did before.

The great expansion of public institutions in America began in
the early years of 20th century when progressive reformers
championed the idea that we all benefit from public goods.
Excellent schools, roads, parks, playgrounds, and transit systems
would knit the new industrial society together, create better
citizens, and generate widespread prosperity. Education, for
example, was less a personal investment than a public good —
improving the entire community and ultimately the nation.

In subsequent decades — through the Great Depression, World War
II, and the Cold War — this logic was expanded upon. Strong
public institutions were seen as bulwarks against, in turn, mass
poverty, fascism, and then communism. The public good was
palpable. We were very much a society bound together by mutual
needs and common threats. (It was no coincidence that the
greatest extensions of higher education after World War II were
the GI Bill and the National Defense Education Act, and the
largest public works project in history called the National
Defense Interstate Highway Act.)

But in a post-Cold War America distended by global capital,
distorted by concentrated income and wealth, undermined by
unlimited campaign donations, and rocked by a wave of new
immigrants easily cast by demagogues as “them,” the notion of the
public good has faded. Not even Democrats any longer use the
phrase “the public good.” Public goods are now, at best, “public
investments.” Public institutions have morphed into
“public-private partnerships;” or, for Republicans, simply
“vouchers.”

Mitt Romney’s speaks derisively of what he terms the Democrats’
“entitlement” society in contrast to his “opportunity” society.
At least he still envisions a society. But he hasn’t
explained how ordinary Americans will be able to take advantage
of good opportunities without good public schools, affordable
higher education, good roads, and adequate health care.

His “entitlements” are mostly a mirage anyway. Medicare is the
only entitlement growing faster than the GDP but that’s because
the costs of health care are growing faster than the economy, and
any attempt to turn Medicare into a voucher — without either
raising the voucher in tandem with those costs or somehow
taming them — will just reduce the elderly’s access to
health care. Social Security, for its part, hasn’t contributed to
the budget deficit; it’s had surpluses for years.

Other safety nets are in tatters. Unemployment insurance reaches
just 40 percent of the jobless these days (largely because
eligibility requires having had a steady full-time job for a
number of years rather than, as with most people, a string of
jobs or part-time work).

What could Mitt be talking about? Outside of defense, domestic
discretionary spending is down sharply as a percent of the
economy. Add in declines in state and local spending, and total
public spending on education, infrastructure, and basic research
has dropped from 12 percent of GDP in the 1970s to less than 3
percent by 2011.

Only in one respect is Romney right. America has created a
whopping “entitlement” for the biggest Wall Street banks and
their top executives — who, unlike most of the rest of us, are no
longer allowed to fail. They can also borrow from the Fed at
almost no cost, then lend the money out at 3 to 6 percent.

All told, Wall Street’s entitlement is the biggest offered by the
federal government (even though it doesn’t show up in the
budget). And it’s not even a public good. It’s just private
gain.

We’re losing public goods available to all, supported by the tax
payments of all and especially the better off. In its place we
have private goods available to the very rich, supported by the
rest of us.